Yet all eyes in the Alps will really be on Washington DC where Donald Trump will next week return to the White House. Trump will address the Davos elite once sworn in. However, this will be done remotely – dialling in from the States rather than attending in person. Perhaps that’s for the best given many of the Davos billionaires are rather sceptical of Trump’s America First approach and fear he could unleash a global trade law where everyone loses eventually. Just this week the IMF warned against his plans. But like him or not, Trump cannot be ignored. Leaders and business figures gathered will likely spend half their time refreshing their phones to check what executive order or comment on tariffs the president has made – or what gossip emerges from the various inauguration balls.
But forget unhappy members of the Labour parliamentary party, Reeves’ fate is much more likely to be decided by Trump. The person Reeves does need to worry about is across the pond.
The view – be it hope – in government is that they will not be the first in line when it comes to potential tariffs. However, there are nerves in government that the UK economy could be particularly vulnerable. The Business Secretary Jonathan Reynolds recently warned that a Trump presidency will be a “challenging time for anyone responsible for trade” – before adding that the “UK is a very globally orientated economy, so the danger to the UK is actually greater than some comparable countries”.
He has hit the ground running ahead of the inauguration with an Op-Ed for Fox News talking about making the special relationship great again. Reeves has known Mandelson for many years and the pair have been in regular touch for the past six months.
Reeves plans to keep pushing for free trade and to avoid a choice between Europe and the States. However, Liberal Democrat leader Ed Davey’s call this week for the UK to join the customs union already has some secret backers in the Labour party. ‘if we need growth and Rachel can’t find it on her own, closer relations with the EU make sense,’ says one Blairite. More controversial for now is Reeves’s pivot to China. Labour MPs were given lines to take this week in a show of support to Reeves and this included defending her recent trip to Beijing. However, Trump and his team are highly sino-sceptic and may well take a dismal view if they fear Reeves is compromising security in pursuit of cash.
Inside Reeves's worst week - and the plan to repair her once bulletproof reputation
Read MoreBut the thing that is likely to most concern Reeves for now is what Trump does on defence. If tariffs are an issue for further down the line, as officials hope, demands for greater defence spending are likely to come fast. There is a G7 meeting in June. Trump has said he wants 5 per cent of GDP spent. However, the US does not even spend this. ‘The comments show Trump sees it as a subscription model, the more you pay the more the perks – but he will want at least 3 per cent of GDP.’ That demand could throw all of Reeves spending plans up in the air – even if the bond markets calm down.
Katy Balls is the political editor of The Spectator magazine
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